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Corporate governance is an important topic for both scholars and practicing managers. To date, most work on this subject has focused on how to resolve potential conflicts of interest between a firm’s senior managers and its shareholders in how firms create and distribute economic value. This work, based in agency theory (Alchian&Demsetz,1972; Jensen&Meckling,1976),has led to the design of a variety of corporate governance mechanisms that have been widely implemented by many firmsaroundtheworld (Aguilera& Jackson,2003; Williamson, 1996). These mechanisms include incentive programs for senior managers—such as CEO compensation in the form of stock and stock options based on firm performance—that act as management “bonding” devices (Jensen & Murphy, 1990), and a variety of disciplinary mechanisms—such as the inclusion of “outsiders”onboardsof directors and legallymandated reporting requirements—that increase the ability of shareholders to “monitor” the performance of a firm (Fama & Jensen, 1983). Work on using governance to resolve possible conflicts between senior managers and shareholders has largely developed separately from governance questions focused on the broader relationships between a firm and its multiple stakeholders (Donaldson & Preston,1995;Freeman,1984).This is ironic sincesome of the earliest work on agency theory conceptualized a firm as “a nexus for a set of contracting relationships among individuals” (Jensen & Meckling, 1976: 310). These individuals, including “individuals” as legal fictions, can be viewed as a firm’s stakeholders. However, instead of examining how governance could enable a firm to work with all of its stakeholders in creating and distributing economic value, agency theorists have mostly focused on governing the relationship between managers and only a single stakeholder: shareholders. An ideawhose timehas come is that of considering more directly the governance of relations between a firm and its multiple stakeholders and not just with its shareholders. This will necessitate broadening the conceptualization of the value created by a firm beyond simply shareholder return (Barney, 2018; McGahan, 2020), a requirement accentuated by the recent COVID-19 public health crisis (Carney, 2020). However, on the face of it, the analysis of stakeholder governance seems likely to be a more difficult problem than the governance of manager– shareholder relations. Theories of shareholder governance focus on how economic value is created by and distributed between two groups—shareholders and senior managers—that are relatively homogenous with respect to their (sometimes)-conflicting interests regarding how they would like to see a firm managed (Jensen & Meckling, 1976). Governance mechanisms designed to reconcile these potential conflicts are relatively straightforward to formulate, although not always easy to implement (Baysinger & Butler, 1985; Tihanyi, Graffin, & George, 2014). Stakeholder governance, however, must deal with much broader relationships between a firm and its multiple stakeholder groups (Freeman, 1984) and the associated creation and distribution of value across them. Conventional corporate finance suggests that, with perfect factor markets, a firm that maximizes the wealth of its shareholders as its sole residual claimants will correspondingly maximize the economic value of the firm (Jensen, 2001).However, this isnot the case in a world of incomplete contracting and strategic factor markets: maximizing shareholder wealth does not necessarily address the conflicting economic interests of shareholders, employees, suppliers, and other stakeholders, and thus does not necessarily maximize the value of the firm (Barney, 1986, 2018; Klein, Mahoney, McGahan, & Pitelis, 2012; Zingales, 2000). Moreover, while shareholder governance has primarily focused on economic returns, stakeholders can have interests that go well beyond narrow economic concerns (Campbell, Coff, & Kryscynski, 2012; Carney, 2020; McGahan, 2020). Employees, for example, are likely to be concerned about appropriating some of the economic profits their human capital helps to create (Morris, Alvarez, Barney, &Molloy, 2017), butmay also have interests in personal health (Michel, 2011), work life quality (Lambert, 2000), internal and external pay

From the Editors—Why We Need a Theory of Stakeholder Governance—And Why This is a Hard Problem